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Lululemon's sales up from year ago, but sales expected to slow in Q4

Shoppers browser through products at the Kitsilano Lululemon store in Vancouver in this 2007 file photo. (Richard Lam/THE CANADIAN PRESS)

The Canadian Press
Published Thursday, December 6, 2012 9:52AM EST

VANCOUVER -- Yoga-inspired retailer Lululemon Athletica Inc. warned Thursday that it expects slower sales growth in the final three months of this year.

In its outlook, the company (TSX:LLL) projects comparable-store sales growth in the high single digits in the fourth quarter, which began Oct. 29. That's down from 18 per cent comparable-store sales growth in the third quarter.

The restrained outlook came as Lululemon reported a $57.3-million profit in its latest quarter as it grew revenue by 37 per cent.

Vancouver-based Lululemon said it earned 39 cents per diluted share in the third quarter, up from $38.8 million or 27 cents per diluted share a year ago. Revenue amounted to $316.5 million for the quarter ended Oct. 28, up from $230.2 million.

"I am very proud of the team for achieving yet another strong quarter coming in ahead of our expectations," Lululemon chief executive Christine Day said in a statement.

"Our stellar results were driven by first-rate execution, strong community engagement, beautiful product and continued strength in our e-commerce business."

During the third quarter, Lululemon opened 12 stores to bring its total to 201 locations.

For the fourth quarter, which includes the key holiday shopping season, Lululemon said it expects revenue to be in the range of $475 million to $480 million and diluted earnings per share in the range of 71 cents to 73 cents for the quarter.

In its outlook for its full financial year Lululemon said it expects revenue to be in the range of $1.36 billion to $1.365 billion and diluted earnings per share in the range of $1.81 to $1.83.

The outlook compared with earlier expectations for revenue in the range of $1.345 billion to $1.36 billion and diluted earnings per share in the range of $1.76 to $1.81 for the full year.

Last month, Lululemon settled a patent infringement case against Calvin Klein and its manufacturer that claimed they copied a specific overlapping style of waistband. Terms of the deal were not disclosed, but Lululemon said the lawsuit will be dismissed as a result.

The retailer filed design patents for its Astro line of pants as early as September 2011, but filed patents on its crop pants much more recently, in June.

Lululemon had claimed Calvin Klein sold pants under its "Performance" brand that included the same waistband design elements and pant style, which is covered by its patents.

Shares in Lululemon were up $2.13 at $70.17 in trading on the Toronto Stock Exchange.